Digital banking is now well and truly the norm today, with around 98.9 per cent of Australian customer interactions with banks occurring online or via apps, according to findings from a new report by the Australian Banking Association (ABA) and Accenture.

The report, Bank On It – Customer Trends 2023, released at the ABA’s annual conference today, also revealed that Australians – among the world’s earliest adopters of digital payments technologies – on average make nearly 500 cashless payments per person each year, among the highest rate in the developed world.

Further, around 60 per cent of e-commerce transactions were found to be transacted through a mobile interface.

The report showed customers’ fast-growing preferences for online and digital engagement, which appears to have rapidly accelerated through the Covid pandemic. Between 2019 and 2022, online banking interactions rose 21 per cent, while interactions using banking apps jumped by 31 per cent.

Banking websites and apps also have the highest net satisfaction ratings of all interaction mediums, standing at 81 per cent and 80 per cent, respectively. By contrast, 69 per cent of branch users and just 65 per cent of telephone users were satisfied with their interactions.

The deployment of chatbots also saw the explosion of AI-human interactions during this period, up 559 per cent since 2019, making a substantial dent in phone-based interactions (which decreased by 15 per cent). However, between the two modes, the call centre still represents around two out of three interactions.

The report also revealed a stark 46 per cent decrease in branch interactions, with similar rates of decline across both metro and regional areas.

The ABA confirmed that, despite ongoing branch closures, customers seeking a branch still typically, in 98 per cent of cases, have access to face-to-face alternatives either from the same bank or Australia Post’s Bank@Post service within 3km.

Mobile wallet boom

Use of mobile wallets, which enables users to digitally ‘store’ their debit or credit cards on a mobile device, also increased more than seven-fold between 2018 and 2022, with 15.3 million cards registered to mobile wallets in 2022, up from just over two million cards in 2018.

Over this same period, the number of mobile wallet transactions increased by a whopping 8,100 per cent, from 29.2 million to 2.4 billion. Between 2021 and 2022 alone, this figure increased by around a third.

The value of mobile wallet transactions also skyrocketed by 12,400 per cent, from $746 million in 2018 to $93 billion in 2022.

Similarly, card payments, as of 2022, account for around 75 per cent of consumer payments, up from just 26 per cent in 2017. This follows a commensurate decline in cash payments, which in 2007 represented 70 per cent of all payment methods; today, fewer than 13 per cent of payments are made with cash, the report revealed.

The Covid pandemic period also, unsurprisingly, drove a steep drop in cash payments, which in 2019 made up more than a quarter (27 per cent) of all payment modes.

Banks’ 8-fold increase in tech investments, yet CDR take-up lags

Consumer demand for digital banking has driven an eight-fold increase in banks’ technology investments since 2005, the ABA revealed, from $3.5 billion to $28.5 billion in 2022.

According to the report, this growth far outpaces occupancy costs, such as lease costs for branches and offices.

“Banks are aligning with customer needs and increasing both their absolute and relative spend on digital infrastructure.”

To meet these growing digital demands, the number of bank employees covering the Consumer Data Right (CDR) scheme, cybersecurity and fraud has doubled between FY18 and FY22, the report revealed.

However, despite the nearly $1 billion invested by Australia’s banks to conform with CDR rules and regulations, considerably less than one per cent (0.15 per cent) of customers from the major banks are currently active in the consumer data-sharing program.

ABA chief executive Anna Bligh, commenting on the report, said “Australia has witnessed a phenomenal shift in customer banking and payment preferences in recent years”.

“As customers increasingly shop, pay, or are paid digitally, they also expect their banking and payment services to be available digitally in a format that is convenient, fast, cost-effective and secure.”

She added that Australian consumers have become keen early adopters of new payment methods.

“Globally, Australians are now at the forefront of adopting cashless payment methods and it’s clear these recent technology leaps are now permanent consumer preferences.”